Financial Planning: Advantages of Financial Planning

Kripananda Chidambaram, 05 Jun 2012

Financial planning is a term used widely in the financial services industry. Financial planning is a process to achieve all your goals of life. Usually the goals are child's education, marriage, car, home, lifestyle and retirement. These goals are achieved by doing activities like budgeting, goals setting, saving and investing, review and evaluation.

Financial planning can be done by yourself or you can avail the services of professional financial planners. Professional financial planner will help create a financial plan for you and will advice on the action steps. They will review it with you periodically.

Financial planning process from a financial planner

  • Gather data and necessary information from you. They will ask you to fill exhaustive questionnaires seeking information on your income, expenses, short term goals and long term goals. To ascertain your risk taking capability they will conduct a risk profile.
  • With the information you provide the financial planners will do a thorough study of your needs and understand you personality and risk taking capability. With their expertise and knowledge they will make a plan for achievement of all your goals.
  • Financial planners then will come up with recommendations and advice. They will guide you and show you the way forward. Implementation will then have to follow.
  • Financial planners will review the progress periodically and answer your queries and doubts.

Advantages of financial planning

The advantage of financial planning whether self done or guided by a financial planner is pretty much straightforward; you will achieve your goals and live an abundant financial life.

Engaging a professional financial planner will bring in the benefits of expertise, professionalism and discipline.

Qualification of a financial planner

Financial planners come under SEBI's Investment Advisers Regulations that came into effect in April 2013. An Investment Adviser must be registered with SEBI. They (the individual adviser or in case of a firm, its employees) must have certification by NISM for one its courses related to investment management or financial planning.

Successful financial planner:

  • Needs to understand human behavior
  • Understand the dynamics of markets and have good knowledge on various asset classes
  • Minimum of 5-6 years of experience in financial services

There is also a Chartered Financial Planner certification offered by FBSB India. This may also be a useful certification to have.

Charges and fees of financial planners

Financial planners typically offer the services for a fee. The fee varies between the need and the services provided. Different financial planners charge different rates. Usually the charges start form Rs 5,000 and can go up to Rs 25,000.

Commonly asked question

Will hiring a financial planner solve my money problems?

Fintotal view: Engaging a financial planner is definitely a positive step. You will become aware and will be equipped to handle your financial life well. But the biggest hurdle is putting the plan to action. If you become disciplined and act with determination you will then be able to solve your money problem.


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